How to Apply for IPO in India?
Investing in Initial Public Offerings (IPOs) can be a smart way to grow your wealth, but understanding the process is key. Here’s an easy guide to help you apply for an IPO in India, ensuring you make the most of this opportunity.
Eligibility Criteria for Applying for an IPO
To make an application for an Initial Public Offering (IPO) in India, investors need to satisfy the criteria stipulated by SEBI and the issuing company. They are as follows:
- Approved Investor Category: You should be from SEBI-approved categories like Qualified Institutional Buyers (QIBs), Non-Institutional Investors (NIIs), Retail Individual Investors (RIIs), or Employees (in case of a quota being reserved).
- Demat and Trading Account: An active Demat account to keep shares and a trading account in a recognised Depository Participant (DP) are mandatory.
- PAN Card: A valid Permanent Account Number (PAN) is required for all applicants.
Linked Bank Account: The bank account has to be linked to the Demat account to make payments and give refunds. - Sufficient Funds: Adequate balance in your account, which will be blocked until allotment is intimated.
- KYC Compliance: Proof of identity and address should be valid and up-to-date.
- Minimum Lot Size: Application should adhere to the minimum lot size as mentioned in the IPO prospectus.
Read in Detail: How to Meet the IPO Eligibility Criteria?
How to Apply for IPO
Application for an Initial Public Offering (IPO) is possible both online and offline. It is easy if you have the necessary accounts and documents in place.
Apply for IPO – Through Broker
1. Get a Demat and Trading Account
To participate in an IPO, you must first open a Demat account and a trading account with a registered brokerage firm like Findoc. A Demat account securely holds your shares in electronic form, while a trading account allows you to buy and sell those shares. Without these accounts, you can’t invest in an IPO.
2. Set Up a UPI ID for Payments
The payment for IPOs is processed via the Unified Payments Interface (UPI), a convenient and fast digital payment method. Ensure that your bank supports UPI mandates for IPOs. This step simplifies payments, as funds are blocked in your account until the allotment process is completed.
3. Log In to Your Broker’s IPO Portal or App
Accessing IPOs has never been easier. Log in to your brokerage account via the web or mobile app and head to the IPO section. Findoc offers an intuitive platform that lets you view and apply for IPOs effortlessly.
4. Choose the IPO You Want to Apply For
Explore the list of current IPOs and select the one that interests you. Before proceeding, take time to review the company’s prospectus—a document that provides insights into the company’s financial health, business model, and details about the IPO. Learn how to analyze an IPO Prospectus before investing.
5. Decide Your Bid and Quantity
IPOs are typically offered within a price band and a minimum lot size. Enter the number of shares you want to buy and specify your bid price within the price band. If you’re unsure, opt for the cut-off price—this option increases your chances of getting shares as it aligns with the final issue price. Learn effective strategies to improve your chances of IPO allotment. Discover effective strategies to boost your IPO allotment chances.
6. Submit Your Application and Confirm Payment
After completing the form, submit your IPO application. Confirm the payment through your UPI app by approving the mandate request. This step blocks the required funds in your account until shares are allotted.
7. Check Your Allotment Status
Once the IPO closes, visit the IPO registrar’s website to check the allotment status. The IPO registrar is a trusted intermediary that handles applications and share allotments. If you’re allotted shares, they’ll be credited to your Demat account. If not, the blocked funds will be unblocked and returned to your bank account.
Apply Online via Application Supported by Blocked Amount (ASBA)
ASBA allows you to apply for IPOs directly at your bank, with funds blocked until allotment.
- Make sure you have a Demat account associated with your bank.
- Log in to your net banking account and go to the IPO section.
- Choose the IPO and fill in details such as shares, bid price, PAN, and Demat number.
- Submit the form; funds are blocked and debited only on allotment of shares.
Apply Online via UPI
UPI is a fast and secure mode of applying for IPOs from your trading account with blocked funds until allotment.
- Make sure you have your Demat account associated with your bank.
- Sign in to your FinDoc trading account and choose the IPO.
- Enter share quantity, bid price, personal information, and UPI ID.
- Submit the application and confirm the UPI mandate on your mobile app.
- Monitor the allotment status online.
Apply Offline
If you are old school and want to apply the old way, you can always apply for an IPO using a physical form.
- Go to your bank branch or broker firm.
- Gather and complete the ASBA application form with your Demat and personal details.
- Enter the shares number, bid price, or choose the cut-off price.
- Enter mandatory KYC information.
- Submit the application form to the bank or broker before the closure of the IPO.
- Your money will be blocked in the bank account until allotment.
If shares are allotted, they will be credited to your Demat account.
Also Read: How IPOs Work?
Things to Consider While Applying for IPO Shares
When you are applying for IPO shares, having certain things in mind can guide you to make a proper application and have a better chance of allotment.
- Research the Company: Learn about the business model, industry, financial health, and growth strategy in the future. This will enable you to gauge whether it is appropriate for your investment objective.
- Select Your Investment Amount: Set your budget based on your risk tolerance and overall financial situation so that you don’t invest too much.
- Select the Right IPO: Study the company’s prospectus very carefully so that you are well-informed about its business, top management, and risks.
- Confirm Account Readiness: Make sure your Demat, trading, and bank accounts are active, linked, and KYC-compliant.
- Apply within the Timeframe: Send in your application using ASBA or UPI by the IPO closing date to not miss the opportunity.
- Monitor the Allotment Process: Once the subscription period closes, view your allotment status and track when the shares are credited to your Demat account.
Read in Detail: Things You Should Know Before Investing in IPO
Benefits of Applying Online for IPOs
Applying for an Initial Public Offering (IPO) is possible both online and offline. Most investors now opt to apply for an IPO online because it is more convenient, quicker, and easier to monitor.
- Time-saving: You wouldn’t have to physically go to the broker’s office or bank, which saves you precious time.
- Convenience: The IPO application online process is smooth and can be done from anywhere, either on a PC or mobile.
- Interest on Funds: In case of application through a savings account, the amount remains in the account and continues to accrue interest until the allotment date of the IPO.
Transparency and Control: An online IPO application provides total transparency, with you having total control and authority over the process.
Why Should You Invest in IPOs?
Investing in IPOs provides one with an early chance to be a shareholder in an expanding business, which has the potential for long-term wealth generation.
- Early Access to Good Quality Stocks: IPOs provide you the option to invest at the ground-level price, in most cases, before the stock gains value in the market.
- Greater Transparency of Prices: SEBI governs IPOs to maintain fair disclosure, whereby transparent price details are noted in the offer document.
- Symmetry of Information: Both retail and institutional investors are furnished with the same facts through the company prospectus, ensuring a level playing field.
- Potential for Greater Returns: IPOs can be released at discounted valuations, allowing investors room for long-term growth of capital.
Required Accounts for Investing in IPOs Online
To buy an IPO (Initial Public Offering) online, you will need the following accounts:
- Demat Account: It keeps your shares digitally.
- Trading Account: It enables you to sell and buy shares in the stock market.
- Bank Account: It is used for the transfer of funds through UPI or ASBA.
Why Choose Findoc for IPO Applications?
At Findoc, we make IPO applications seamless and straightforward with our user-friendly platform and expert support. Whether you’re a first-time investor or a seasoned trader, our tools are designed to help you succeed.
Interested in investing in the latest IPOs? Explore the current IPOs open for subscription and apply for IPO through Findoc to take your first step towards smart investing!
Conclusion
It is simple to apply for an IPO online if you know the prerequisites and procedures. With the right accounts, proper research, and proper planning, you can be a part of the growth story of a company from day one of trading.
Always read the company details, analyse the risks, and invest funds you are comfortable with. With discipline, you can make IPO investing a successful component of your financial strategy.
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Frequently Asked Questions (FAQs)
You can purchase IPO shares online by accessing your trading platform or bank’s net banking, choosing the IPO, filling out details, and applying under ASBA or UPI before the closing time.
Yes, you can directly apply for an IPO through your bank’s ASBA facility or trading account. You must have a Demat account, bank account, and PAN card to do so.
To invest in an IPO, beginners must research the company, determine a budget, open a Demat and trading account, and make an application for the IPO through ASBA or UPI.
An IPO can be good if the company is having good fundamentals and growth prospects. But returns are never certain, so invest after doing research and evaluating risks.
You can subscribe to your IPO. First, apply from your bank or broker, block the mandatory funds through ASBA or UPI, and finally submit your application during the IPO time. Yet, your allotment will be based on demand and availability.